Carrying car liability insurance is just one of the ways drivers can show that they have the capability to compensate those who they may injure in accidents wherein they are at fault. In the states of New Hampshire and Virginia, drivers are allowed to choose any state-approved way of showing financial responsibility as an alternative to carrying auto insurance.

Carrying car liability insurance was first made compulsory in 1925, with Massachusetts and Connecticut as the first two states to impose it on drivers. Having auto insurance was made compulsory for three reasons:
First, because there were signs which said that cars will crash (probably due to mechanical defect or driver negligence);
Second, as cars crash, someone is more likely to get injured, besides properties getting damaged; and,
Third, which is also the most important reason, to enable at-fault drivers cover cost of damages to victims and never default on making compensatory payments.

Now called the Financial Responsibility law, this mandate is directed to anyone who wants to have driving privileges in the U.S.

Payment of compensation depends on the type of liability system recognized in the state where the accident occurred. In “tort” or “fault” states the victim is compensated by the at-fault driver’s insurance provider; in “no-fault” states, however, both drivers are compensated by their own insurance providers regardless of who was at fault in the accident.

It is but natural for a driver, who diligently pays his/her insurance premiums to expect financial protection from his/her insurance provider in the event of a car accident. According to an Ontario car accident lawyer, however, “most insurance companies operate like businesses, whose only concern is their profit. They will provide sub-par coverage, underpay your settlement, or unjustifiably deny a claim to protect their bottom line. These bad-faith insurance practices are infuriating, not to mention unethical, and deceive policyholders into false promises of coverage. When insurance companies abandon you at the moment you need them most, you are left to pay expensive out-of-pocket prices that cause substantial financial burden.

Insurance companies have an obligation to act in good faith and operate in the best interests of their policyholders. To help ensure that you can collect the total amount of benefit stipulated in you policy, insurance claims lawyers may be able to provide just the type of legal assistance that you need to confront companies that employ underhanded tactics to avoid paying out a claim. After an unanticipated accident or natural disaster, you deserve to obtain the coverage that will help you recover, including damages from medical bills, property damage, and ongoing rehabilitation.”